Hudson v. Caterpillar Tractor Co.
| Decision Date | 25 August 1983 |
| Docket Number | No. 4-83-0157,4-83-0157 |
| Citation | 117 Ill.App.3d 720,73 Ill.Dec. 55,453 N.E.2d 880 |
| Court | United States Appellate Court of Illinois |
| Parties | , 73 Ill.Dec. 55 Robert W. HUDSON, Richard Betterton, Charles Hankins, Plaintiffs-Appellees, v. CATERPILLAR TRACTOR CO., a Corporation, Defendant-Appellant, and Mid-America Contractors & Builders, Inc., a Corporation, Defendant. |
Hull, Campbell, Robinson & Gendry, Decatur, for defendant-appellant; Thomas W. Gendry, Decatur, of counsel.
Welsh, Kehart, Shafter & Hughes, P.C., Decatur, for plaintiffs-appellees.
This case concerns a suit for enforcement of a subcontractor's mechanic's lien against an owner of real estate which has been improved pursuant to a contract with a general contractor. The owner contends that it is entitled to a reduction in the amount of the lien, because of payments it voluntarily made to the United States after receiving notice that the United States had a tax lien against all monies owed to the general contractor. The trial court held that the owner was not entitled to a reduction. We agree.
On December 12, 1979, plaintiffs, Robert W. Hudson, Richard Betterton, and Charles Hankins, brought suit in the circuit court of Macon County against defendants, Caterpillar Tractor Co. (Caterpillar) and Mid-America Contractors & Builders, Inc. (Mid-America). The suit arose out of a contract whereby Mid-America agreed to construct a building on land owned by Caterpillar. Plaintiffs sought to foreclose a subcontractor's lien resulting from Mid-America's failing to pay them for work they performed pursuant to the subcontract. After a bench trial, the circuit court entered a judgment of foreclosure on September 28, 1982, (1) finding plaintiff was entitled to recover from "Defendant" the sum of $20,513.41 which included interest in the amount of $5,068.97, (2) finding plaintiff had a lien in that amount upon the premises of Caterpillar, and (3) ordering a sale of the premises to satisfy the amount owed. Caterpillar appeals. We affirm.
The case was tried on stipulated facts. The contract between Caterpillar and Mid-America was executed on December 14, 1977. On September 13, 1978, and October 17, 1978, pursuant to 26 U.S.C.A. § 6323, the United States properly recorded tax liens against Mid-America in the respective sums of $7,249.87 and $15,444.43 arising under 26 U.S.C.A. § 6321. On October 26, 1978, the subcontract between plaintiffs and Mid-America was executed providing for a total price of $15,444.43. On December 26, 1978, the Internal Revenue Service served upon Caterpillar a notice of levy against any sums owed by Caterpillar to Mid-America. Plaintiffs complied with all statutory provisions necessary to perfect its claimed lien.
The original contract price between Cateprillar and Mid-America was $65,190. On June 16, 1978, without complying with its statutory duty to obtain affidavits of amounts owing to subcontractors (Ill.Rev.Stat.1977, ch. 82, par. 5), Caterpillar paid directly to Mid-America the sum of $53,076 for work already performed. Thus, only $12,114 of the contract price remained unpaid. After receiving the notice of levy from the Internal Revenue Service, Caterpillar negotiated with that agency and obtained an agreement whereby the tax lien was released upon the payment by Caterpillar of the sum of $9,864. The theory of the agreement was that additional work at a cost of $2,250 had been arranged by Caterpillar to complete the work provided for in the original construction contract thus reducing the amount owed on it.
Caterpillar maintains that the case turns upon a determination as to priority of right to "moneys * * * due [to Mid-America] under the original contract" (Ill.Rev.Stat.1977, ch. 82, par. 21) between (1) the lien of the United States, and (2) the lien given by the aforesaid statutory provision to plaintiffs as unpaid subcontractors. Caterpillar contends that, because a Federal tax lien has priority over a mechanic's lien created by state law (United States v. Security Trust & Savings Bank (1950), 340 U.S. 47, 49, 71 S.Ct. 111, 112, 95 L.Ed. 53, 56; 26 U.S.C.A. § 6323(h)(2)), it should receive credit against plaintiffs' lien...
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